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Making the Right Connections in the New Mobile World Technology, Tablets and Tariffs
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Making the Right Connections in the New Mobile World Technology, Tablets and Tariffs


How mobile is at the centre of this revolution, the role of tablets and new hybrid devices and how operators intend to charge for their usage.

How mobile is at the centre of this revolution, the role of tablets and new hybrid devices and how operators intend to charge for their usage.

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  • Apple success in multiple segmentsHuge volumes since 2007Over 365 million iOS devices shipped400mitunes accountsOver 180 million iPhones shippedMore than 25 billion apps downloaded + $4bn to developers~$100 billion in the bankMove beyond consumers to corporate usersCreation of new category with iPadNokia / RIM market share collapseDevastating loss in key segments for both companiesOperational misstepsCaught out by agile competitionThe ascendancy of AndroidUnprecedented successOver 900k activations per day (June 2011)Broad tier-one manufacturer supportBurgeoning brand recognition with consumersFree MobileLaunched in January 2012Flagship tariff of €19.90 per month, including unlimited domestic and international calls. Low-cost distribution model, selling SIM-only contracts mostly over the internet.No results published yet by the operatorOrange launched Sosh in autumn 2011, aimed at the youth market and users of social networking, to protect market shareBy mid-Feb Orange said that it had lost 201,000 customers, equivalent to 0.7% of its mobile base. This comprised 1.04 million customers who had switched to rival networks and 837,000 gross additions. The gross additions were boosted by Sosh, which reached a total of 90k subscribers. Requests for mobile number portability had returned to near normal levels of around 10,000 per day having peaked at around 150,000 in the first 48 hours following the launch of Free.Likely to see major impact on margins for incumbents this year and lower ARPU which at around €35 is one of the highest in Europe.
  • In the early stages of whole new marketUsers bring behaviour and expectations from the computing world to tabletsTablets not seen as a “mobile” deviceBut mobile market conditions complicate the purchase decisionUser behaviour is already adapting to the new categoryEnterprise software needs to improve before business customers engage with tablets
  • We have not reached the half-way point with smartphones yet~1bn mobile broadband SIMs so farA demand multiplier is operating with mobile data (also with fixed broadband)More people with devicesMore devices per personMore data per deviceForecasts show traffic trends continuin


  • 1. Making the Right Connections in the New Mobile World Technology, Tablets and Tariffs Shaun Collins Twitter: @shauncollins
  • 2. This is not the world we planned for• Introduction• Market disruptions are immense and unpredictable• New behaviour, new devices, new entrants• Personal and professional cloud• Technology, Tariffs and Tablets• Q&A © CCS Insight 2
  • 3. Massive Disruptions in an Unpredictable Market © CCS Insight 3
  • 4. Operators are managing change in a tough trading environment Revenue (£M) Revenue Split, 1Q12 4,000 50% 48% 3 2,000 10.3% Vodafone 46% 27.8% Data 44% 9.8% Data 26.8% O2 Data 42% 28.3% 29.8% 2,000 Data 40% 33.7% 4,000 38% 1Q11 2Q11 3Q11 4Q11 1Q12 Everything Everywhere Data Voice % Data 33.6% Note: data refers to share of total for four main operators. Non-Voice Services as % of Total Revenue Subscriber Split, 1Q12 50% 3 45% 10.8% Vodafone 25.2% 40% Post-paid 11.8% 35% Post-paid 26.4% O2 Post-paid 30% 29.3% 28.6% Post-paid 25% 33.2% 20% Everything 1Q11 2Q11 3Q11 4Q11 1Q12 Everywhere 34.8% Vodafone Everything Everywhere O2 3 Note: data refers to share of total for four main operators. © CCS Insight 4
  • 5. Post-Pay Jungle - June 2012 - UK iPhone 4 Samsung Galaxy S3 HTC One Nokia X 808 PureView Samsung Motorola Nokia Galaxy Note RAZR Samsung N9 RIM 9900 MAXX Omnia 7 HTC One Nokia Lumia S 900 HTC Motorola Titan HTC Sony RAZR Sensation Samsung Huawei Xperia S Nokia Lumia RIM XL Galaxy S II Ascend 800 9800 P1 Sony Xperia P HTC Radar Samsung HTC HTC Galaxy S Advance Trophy ZTE Tania Desire S LG Samsung Samsung HTC L7 Galaxy W RIM GalaxyMotorola One V 9360 Ace 2 Nokia LumiaDefy Plus Curve Samsung 710 LG Sony Nokia Lumia Galaxy 551 Optimus 7 Xperia U Nokia RIM 610 9300 C6 Curve Alcatel LG RIM RIM HTC Huawei OT-995 L5 9380 Curve 9320 Wildfire S Ascend G300 Samsung Curve Alcatel Huawei Galaxy Mini 2 OT-990 Blaze LG Nokia L3 302 Asha SOURCE: CCS Insight © CCS Insight 6
  • 6. Blurring Hardware Categories © CCS Insight 7
  • 7. How are users thinking about their mobile/tablet usage?CCS Insight presentation to KPN March 29th 2012 8
  • 8. Two Megatrends – Smartphones and TabletsTablets Worldwide tablet shipments in 2011 - 65m Worldwide PC shipments in 2011 - 414m Our main scenario - tablets take us into a “Post-PC” era – Long term annual sales potential - 700-800m / year Source: CCS Insight, various, Apr 2012 © CCS Insight 9
  • 9. Two Megatrends – Smartphones and Tablets There is still work to do to realise the full value of smartphone growth – Smartphones are available at <€100 – The next wave depends on affordability of pre-pay data tariffs Source: CCS Insight, various, Apr 2012 Parallel story with tablets and multi-device tariffs © CCS Insight 10
  • 10. Who’s Buying Tablets? Tablet Ownership by Age Group - Europe 35%  65:35 male to female 30% 25%  Tablet ownership is 20% concentrated in older age 15% Apple iPad groups 10% Other 5% 0%  Maps broadly onto wealth 13-17 18-24 25-34 35-44 45-54 Over distribution in Europe 55 Sample4500  Demographics are likely to broaden as lower priced devices become available – E.g. Amazon Kindle FireCCS Insight Tablet User Survey: October 2011, EU5 © CCS Insight 11
  • 11. What Is A Tablet? What Would You Say A Tablet Is?  Nearly half think of tablets as a genuine new category 0% 10% 20% 30% 40% 50% Exactly what it is, a tablet  One third think of them in computing terms in Europe Simple easy to use computer – 40-50% in Asia, A laptop but with a smaller screen  Comparisons with mobile Super duper smartphone phones have much lower Other weight A mobile phone but with a bigger – 85% of users do not think of Other screen tablets as a “mobile” devices Apple iPad Portable TV with a smaller screen – This has big implications Sample 4500CCS Insight Tablet User Survey – Oct 2011, EU5  But the mobile market complicates the purchase with the 3G option © CCS Insight 12
  • 12. New Categories Emerge © CCS Insight 13
  • 13. Data consumption by users on mobile Video is a “wrecking ball” for networks And it’s everywhere – Social use – Work use Source: FT, 4th May 2012 © CCS Insight 14
  • 14. Data consumption by users on mobile is growing faster than supply Worldwide mobile data traffic vs. voiceData traffic shows astonishing growth 18% sequential growth of total in 3Q11 60% y-o-y growth of mobile data users 300% smartphone traffic growth 2011 Data Total traffic doubled every 4-5 quarters through 2010 / 2011We have not reached the half-way point Voicewith smartphones yet ~1bn mobile broadband SIMs so far Source: Ericsson Traffic and Market Data Report, November 2011 © CCS Insight 15
  • 15. Tariffs are beginning to recognise this new behaviour Long signalled but significant restructuring of tariffs in USA – Apply up to 10 devices onto a tariff (at various costs) – Then add limits of data – all with unlimited voice and text (wi-fi not included) Long term caps off the voice and text data streams and seeks to capitalise on data  Unlimited tariffs will gradually disappear  Some anomalies here (Tablets $10/ Netbooks $20)  On average this is seen as ARPU accretive for Verizon © CCS Insight 16
  • 16. Verizon’s Initial LTE Services Messaging Was Unremarkable Verizon’s initial marketing of 4G LTE services offered nothing that was not available on 3G Other than a vague promise of better speed – “become a high octane version of you” This has now evolved, but only slightly © CCS Insight 17
  • 17. Network coverage and capacity – 4GThe need for 4G 3G coverage is hampered by high frequency spectrum bands – However, operators deserve some criticism here In some urban areas 3G networks are suffering congestion The benefit of 4G will depend on the frequency band – Higher frequencies – urban coverage and capacity – Lower frequencies – mainly coverageThe result of 4G The mobile industry does not fully appreciate how good 4G is An “Experience Good” – The result is that people will use more data Operators try to use 4G as a way of raising prices? 4G coverage will take years to build © CCS Insight 18
  • 18. So What? • Massive, unpredictable changes in mobile right now – Fragmentation and complexity is now the standard – Data moves to the centre of the decision making process – More to come – technology and applications • Cloud computing is capturing the imagination of the user – iCloud and Facebook are creating an expectation around use cases – Desire for connectivity will increase exponentially • 4G will be crucial to the multiplier – Applications decisions are made on mobile first then desktop – Device decisions and technology play a large role • Tablets and smartphones replace desktops and laptops – Cloud and applications will drive an improved experience – Access and response times will improve dramatically © CCS Insight 19
  • 19. Q&A @ccsinsight @shauncollins© CCS Insight 20